Hello everyone and Welcome once again to
another episode of Selling Greenville
your favorite real estate podcast here
in the upstate of South Carolina I'm
your host Stan McCune realtor here in
Greenville Greer Spartanburg wherever
you can think of here in the upstate of
South Carolina I work in that market and
as you can know from all my other
episodes you can find all my contact
information in the show notes just reach
out to me however is easiest for you if
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guys could do that today we are going to
talk about the rental property market
for landlords and the and the
perspective of people either entering or
exiting the real estate rental market
and this is very interesting because it
it's very clear that there are now kind
of two factions forming and these aren't
really factions that are forming that
are like liberal or conservative or
anything like that these are factions
within the landlord Market that are
they they are political to an extent but
they're not political as in right or
left but they are coming to opposite
conclusions at the same time I think
it's important to clarify for a second
that at least here in Greenville and
part of this may be the demographic of
Greenville but a lot of the landlords in
this area do tend to be more right
leaning a lot of more progressives
actually hate landlords for whatever
reason on the extreme side of things
I don't mean on on the Practical side of
things obviously there's the
neoliberal camp which of course I'm I'm
not going to get into too much of this
but there are more capitalist leaning
progressives of course plenty of them
that's that's the majority of them
but on the extreme side of progressivism
landlords really have a dirty name and
and there's a belief that even in
some circles that landlords shouldn't
exist which is kind of an absurd
conclusion to come to in my opinion but
that's an opinion that some people have
the majority of the landlords that I
communicate with are more conservative
leaning they're more capitalist leaning
and that's for obvious reasons because
when you're landlord you see in real
time the impact that more socialist
type of decisions that the government
makes how that directly impacts not just
the landlord but also the tenants and
ultimately nothing impacts the landlord
that doesn't also impact the tenants
there is a they are connected at the hip
because as you see more expenses come on
the landlord that landlord has one of
two options options either that landlord
has to raise rent on his tenants on or
on her tenants or that landlord must
sell the property to someone else and
for that person to be able to justify
the purchase they have to be able to get
money back in one way or another so
often times what happens is when the
property changes ownership oftentimes
the new owner wants to try to get rents
raised in some way and often times that
means the tenants get to point where
they can't afford it anymore they have
to get evicted or whatever the case may
be and then it it gets you know in a
situation where it's a it's a lose lose
right the tenant loses their housing
situation that they had they might have
been in there for years they no longer
can be in there the new owner has to
have higher vacancy rates and has to
figure out you know has to make a bunch
of improvements in order to justify the
price increases and it's just a ripple
effect that happens
so we have to we have to start by
understanding that that
everything negative or positive that
happens to a landlord gets passed in one
way or another to the
tenant so all that to be said in the
background here the past one and a half
years all right really you know going
back to the start of covid has been
quite the roller coaster for landlords I
mean that's an understatement and I know
this from firsthand experience I am a
a landlord I don't manage my properties
but I own rental properties and it's
it's been quite the roller coaster it's
been obviously eviction moratoriums and
now there's a big debate because the
CDC just renewed their eviction
moratorithe Supreme Court made
passed a ruling on the slimmest of
margins 5 to four that the CDC was
allowed to have an eviction moratorium
last year but but just Kavanaugh who
ruled in favor of that said that if the
CDC attempted to do that again and it
was brought to the Supreme Court that
he would not be in favor of that and
that he would want it to be passed
legislatively through Congress well
guess what the CDC just extended it
again there are States now suing
and it it seems likely that that the
CDC will be overruled on this but but
the trend it's a very interesting Trend
about how now it used to be very
local it was always very local the rules
for landlords the rules for tenants but
there is
increasingly a threat of the federal
government trying to take it over and of
course this is way out of the CD the CDC
in my opinion should not be telling
landlords anything that is completely
it's a Center for Disease Control what
are they focused on with with who's
renting and and what the rules are for
renters they have no business that they
don't have any idea what's going on
in that Marketplace and they have no
business ruling on that that should be
something that's done legislatively and
so I think that that's that's absolutely
out of control of course that
impacted a lot of a lot of landlords
it did not personally impact me I'm
grateful for that but I do know
that there are a lot of landlords here
locally as well in Greenville that
were impacted negatively by the eviction
moratoriums Additionally the past one
and a half years as most if not all
of you know construction costs have
skyrocketed and it's just been kind
of a crazy time as both supply of
construction materials went down but
demand went up and so we saw some things
tripling quadrupling in prices and
still a lot of that has not leveled out
and it's just a strange situation
where you know Lumber Mills were shut
down and different things like that were
deemed basically non-essential during
covid but then guess what everyone's you
know in quarantine you know sitting
at home thinking okay I'm spending
way more time at home than I ever have I
want to improve this place and so
they're going out and buying even more
Construction Supplies than they ever
have to do more improve in their home
and and so we had this crazy situation
where there's less things to buy to
improve your home than ever before but
more buyers looking to buy those things
and so that caused a lot of Chaos in
terms of people renting trying to
improve the the rental properties that
they have not to mention as well with
all that demand you know a lot of
people are not doing these projects
themselves and so what happens you
know when they need to hire someone to
do a project there's shortages of Labor
as well and so it's hard to get
contractors it's hard to get subs out to
your property because those
shortages exist as well and so then the
cost of Labor also goes
up and and then you've got you know
tenants getting stimulus checks and
these some of these tenants aren't
paying their rent because they they have
an out with the with the eviction
moratoriand but they're getting
stimulus checks and instead of taking
those checks and and paying their rent
they are instead buying smart watches
and things like that and I'm not saying
that everyone is doing that but I've
heard plenty of stories of this types
this type of thing happening where
tenants have stopped paying rent and
they're they've got more money really
than they ever have because of all the
government stimulus but they're choosing
to spend it on frivolous things rather
than trying to get caught up on their
rent and and it's going to be difficult
when for a lot of tenants when they
are finally allowed to be evicted how
are they going to get caught up on their
rents these ones that have gotten
really far behind it's going to make
it very
challenging so all that to be said is
well let me back up for second in
addition to all of that so those are all
on the federal level things things on
the federal things on the on the
Countrywide level but in addition to
that we've got the state of South
Carolina and Greenville County
specifically which we've talked about in
the past has a really inequitable
property tax standard whereby landlords
end up footing the bill for the public
schools in our area and that's kind of a
a strange system because landlords don't
benefit from the public schools you know
you typically
people typically pay taxes for things
that they benefit for well landlords
aren't going to public school landlords
aren't sending you know their kids to
the public schools of their rental
properties they the people I I
believe and a lot of people believe that
you should pay for the public school
that you're zoned for and that's it and
and only if you have an opportunity to
send children to that public school if
you've got rental properties
scattered all throughout the place and
you're paying for you're paying
property taxes for those rental
properties it shouldn't be footing the
bill for the public schools and and so
that's something that even our governor
here in South Carolina has said that he
wants to look at the difficulty there
as we've talked about in the past on
this podcast is well if you if you take
away all that money somehow you've got
to find a different way to to pay for
these public schools and so I don't
anticipate that that's going to change
anytime soon but unfortunately that's
put the squeeze on landlords which again
as I alluded to before puts the squeeze
on tenants rental properties end up
costing about three times as much in
terms of property tax as owner occupied
properties and that is because of this
inequitable property tax standard and on
top of it all I mentioned so that's a
state thing but Greenville County
specifically has gotten extremely greedy
in terms of their reassessment of
property values and and they see
something happening here that they want
to get in on and and this is the way all
governments are even in Greenville which
is considered a more small government
area listen when any government sees an
opportunity to get more tax revenue they
are going to jump on that they are
absolutely giddy at the prospect of
gentrification that's a that's kind of a
bad word in a lot of circles but guess
what at the County office they love it
they love to see these housing
affordability go down because as housing
affordability goes down that means that
they can raise property taxes on people
and so there is a moral hazard we always
talk about housing affordability with
our with our local politicians but
getting them to actually be concerned
about affordable housing is a is a tough
sell because they get more money coming
into those County coffers when housing
becomes less affordable because then
they can reassess at a higher price and
justify it and now you've got a
situation where the county is bringing
in more money because the the cost of
housing is going up but it's putting the
squeeze on so many people and it's a and
it's a a terrible thing in a lot of
ways and and it just it gets worse
because as those prices go up fewer
people can buy but then as the the
property taxes then get get raised along
with the prices of the houses going up
the property taxes get raised and and so
then those landlords end up having to
increase rent in order to be able to
even stay afloat people think landlords
have tons of money they don't talk talk
to a few people that have rental
properties these most of these people
are Mom and Pop landlords that don't
have a lot of money and maybe they
shouldn't be landlords that's a whole
another discussion for a whole another
day but the point is that the the state
and the county is not taking they're
assuming that landlords are are all
super wealthy you know super wealthy
investment groups based out of New York
and the majority of them are not the
majority of them are just normal people
like me and you just living here in
South Carolina that are just trying to
have some rental properties in our
Investment Portfolio and the county
just basically runs over all of us and
so there is all of this I'm painting a
pretty Grim picture right for for owning
rental properties because this is a grim
picture that has been painted for me the
past year I've heard a lot of angst from
people that own rental properties that
are like what is the future of this
going to look like I mean should we exit
all together and I've seen some people
start to sell off their rental
properties because they're just like I
don't want to be a part of this future
this future of you know the feds telling
me what I can do with my rental
properties and the and the FEDS not
holding tenants accountable and all
these other things and the and the
county of course you know having no
checks and balances in terms of of what
they can do on on taxing landlords
and their properties but this year so
that was that was last year I really
started to hear a lot of that angst but
I have heard a really different twist
this past year and a and a different
faction emerge this faction was not
around last year at least I did not deal
with them but during the Biden
Administration this faction has become
very prevalent
and the second faction basically sees
the concerns that we've mentioned thus
far but they see even bigger
concerns in the opposite direction they
see concerns about hyperinflation coming
down the road with the Biden
Administration basically spending money
that we don't have that money has to be
paid for in some way either you can
raise taxes on everyone which is very
unpopular or you can do a secret tax
which is just inflating the the the
dollar just printing more dollars to
spend for for all of these different
projects well that's a tax that we all
end up paying as our dollar becomes less
valuable we all know that wages don't
keep up with with the devaluing of
the dollar so if if the dollar goes down
in value by 1% in a given month you're
you know your salary doesn't go up by 1%
in that month you're it takes a while
for that to get readjusted and it never
keeps up up additionally funny things
happening in the stock market you know
we've heard about meme stocks and and
just a lot of speculative things
happening I and again let me get out in
front and just say I'm no financial
planner I'm not a financial adviser
nothing that I'm saying on here
constitutes Financial advice talk to a
financial adviser for that but but
this is just what I've heard from other
people saying there's a lot of funny
stuff happening in the stock market I'm
a little bit concerned about what I
have in there and and and my lack of
diversification in terms of I've got too
many eggs in that stock market and that
Wall Street
basket additionally what's become
really popular among people that tend to
be into real estate is the
cryptocurrency market and and I am no
expert on cryptocurrency by any stretch
but I think pretty much everyone expects
that there is going to be some major
crackdowns on cryptocurrency and on
Trading looming and actually there's a
big debate right now going on about it
again I'm not very knowledgeable about
that I just know that that is a major
major concern among a lot of people
that trade crypto is that the
government is going to come in and and
really kind of have a hostile
takeover of that market additionally
meta concerns again these are all just
concerns I'm hearing from this other
faction this other faction that that is
emerging just meta concern concerns
about the US economy and the and the
fact that it appears to be lagging
behind other economies particularly
China what does that mean is a recession
coming are we in a bubble not not a
real estate bubble specifically but a a
just a economic bubble as a whole and
what is that going to do again to their
Holdings in the stock market in equities
in crypto all these other things and
and the here's where the people that
have all of those concerns here's the
clusion that they're coming to they're
coming to the conclusion that real
estate is much safer than all of these
other things if I have rental properties
I am in a much safer position than I am
if I have all of these other Holdings
and all of these other things that are
so much more volatile because you know
people always need a place to live
and traditionally real estate has been
considered a very safe place to put your
money because real estate does tend to
appreciate at least on par with with
the rate of inflation and here in
Greenville it's tended to significantly
outpace inflation typically and so
that's something that that that's the
conclusion that I'm now seeing a lot of
people come to so whereas last year I
was hearing all these people saying man
I I think we need to to exit some of
some of this real estate that we have
some of these real estate holdings we
have now I'm hearing a lot of people
saying
okay I don't have nearly enough real
estate I need to to park some money in
that at least temporarily at least to
kind of get through the next few years
see what happens you know after
theoretically after Co is gone I mean
who who knows when we'll be able to say
that but they're they're concerned
that this Administration is just
spending while spending all of the money
of the common folks while also then
putting regul on things that hurt common
people just average everyday Joe's
the
most and so U I was talking to someone
just recently just this past week about
this who is trying to move out of some
of some of his you know stocks and
equities and things like that and trying
to purchase more real estate and I was
joking with him he should find a way
to trade some of his Holdings that he
has in that market trade it with someone
who's in a situation where they have
feel like they have too much real estate
and are trying to diversify in the
opposite direction because we do have
these two very different camps that have
emerged and if only there was a way that
they could just trade with each other
of course if the government ever found
out about that they would freak out
obviously that's that's not how this is
supposed to work but that was
just something that you know I had I had
a good laugh with someone about that
this
week so what is a fair Middle Ground
where where do we go what do we do with
all this information with all these
conflicting opinions all these
different ideas about what's
happening what's the future of the
country what's the future of the economy
and and I think we need to distill it
all down to the core of what this debate
is about the core of this debate is over
how safe an investment is how safe is is
an investment is your investment in the
stock market safe is your investment in
real estate safe is your investment in
crypto safe how safe is that investment
and as I said before real estate has
always been considered an exceptionally
safe investment now what happened with
last year people started to see some
some chinks in the armor so to speak of
that of the safety of that real estate
investment they started to see
okay it's not as safe as it once was now
we're starting to see that okay whereas
in the past if we had a tenant that
wasn't paying
we could evict that tenant and we could
turn that property that's
nonperforming into a performing property
again well some of that went away last
year with the eviction moratoriums and
some of the other things that were
happening and you know now locally
here in Greenville specifically we're
starting to see and and I'm hearing this
more and more that it's like okay you
know again the property tax problem is
is a real problem you know at what point
is it going to to be that I get taxed so
much to a point where I can no longer
raise rents on people that that they
just can't afford this property and I
can't afford to keep it then what then
then what do I do you you there has
to be a Tipping Point there has to be a
tipping point at which it's no longer
financially feasible for someone to have
a rental property with all this overhead
and to be able to charge that amount to
the tenant and so that is the concern
over okay real estate is typically a
very safe investment but there are some
things now that are a little bit more
volatile that need to be
considered and so the question is now
whether the safety that rental real
estate affords even after the beating
that it's taken during the co during
covid whether whether that safety
perhaps is is has been Whitted down to a
point where it's no longer safe enough
or whether all these other meta things
that are happening actually mean the
safety of real estate is even more
important than it's ever been and and
this is a a great question and it's it's
one that deserves some really serious
consideration and and I'm not going
to sit here and tell you what my opinion
is because my opinion is F first off
again I have to be careful with with
offering Financial advice but I have
kind of mixed feelings on this I can see
both sides of it and and I personally
believe
that you know the way I handle my own
finances and my own Investments that
there should be diversification that
there should be a little bit here a
little bit there a little bit all over
the place and I have loved real estate
Investments as a whole but there are
some major concerns that need to be
considered and that need to be that
need to be addressed when it comes to
this you have to make sure that your
numbers work you have to make sure that
your properties are performing and you
have to do your best in order to in
in order to ensure that a rental
property isn't just doing well now but
will continue to do well in the future
there are some strategies that that
come into play there I I think that the
cost perd door strategy is a good one
making sure that you're not
overspending on a perdo basis it can be
a little bit challenging to have a
bunch of single family homes that are
rental properties because single family
homes cost a lot of money if you can buy
multif family that is in a lot of
ways the way the way to go because you
can get multiple doors cheaper than you
can if you're just buying a bunch of
houses however the single family
Market has some opportunity in in
short-term rentals with Airbnb and and
things like that but again you have
local government concerns where where
you know the City of Greenville doesn't
like Airbnb properties they want those
to be taxed as hotels etc etc and so
there's a lot of a lot of
considerations there and of course
obviously we don't want to see more
federal government involvement in real
estate that's definitely something that
we need to to monitor because the
state and local government involvement
that we have is is bad enough right we
we don't need all these layers of
involvement in rental properties but at
the same time what happens if these
hyperinflation concerns proved to be
true what happens if we we reach a
point where just the the currency has
just been devalued so much and it's like
okay basically what I own is just losing
value constantly but real estate does
not real estate typically holds its
value so that is is a major factor a
major concern that is worth considering
what if what if the currency gets
devalued to the point that we Plit
into a
recession th these are the concerns that
I'm hearing from people and perhaps
they're alarmist perhaps you know we've
heard a lot of these concerns for a long
time I used to work with someone that
that hoarded gold and silver like
actual bars of of gold and silver and
and and there are people out there like
Peter Schiff that that certainly
believes that as well and you know he
has been sounding off these alarms of
hyperinflation for years and years and
it hasn't happened the way he
anticipated that it would happen and so
but there's got to be a point at
which it does happen right and so we
have to keep all of that in mind and
time will tell obviously I think we
have to be careful and and make sure
that we get into the right the right
properties make sure that we make the
right decisions take everything into
account take into account what the what
the federal government is doing take
into account what the local government
is doing so taxes are going up right
property taxes are going up what do we
do about that well South Carolina has
a program called ATI accessible
transfer of interest you can Google that
it's a way if you're purchasing
investment real estate to try to avoid
it can help you to get your your
reassessment amount lowered I I think
by as much as 25% I'm not an expert on
that do your own research on that as
well another good strategy that a lot
have employed purchase a property that
needs a lot of work purchase it cheaply
do all the work yourself the county
is less likely to reassess you at a
at a higher price point because they
can't account for all the work that
you've done they're they're not that
organized perhaps at some point they
will be but they tend to go more off
of the sales price than off of the
work that you've done so you're less
likely to get reassessed at a higher
rate if you're purchasing something
cheaply and then renting it out so
there's a a lot of different a lot of
different things that can be done a lot
of different considerations but at
the end of the day you have to consider
the risk and the reward of real
estate investing and and decide what
camp you're in and and maybe there's
wisdom in both camps maybe you're not
the camp that's like I'm going to exit
all of my real estate but maybe you're
not the camp that's like I need to buy
up as much real estate as possible a
lot of people find themselves in the
Middle Ground I think that's where I
find myself for the most part it's so
a fluid situation we'll we'll we're
still early on in the Biden
Administration so we're still figuring
out all that they are going to to do all
that they are planning to do which may
hurt real estate or it may make real
estate even more of a safe haven than it
was before so that's it for today's
episode I hope you guys liked it I hope
you guys have a great rest of the week
looking forward to to communicating
with many of you so reach out my contact
information is in the show notes I'd
love if you could leave me a rating or a
review as always until next time stay
safe
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